How to Increase Borrowing Capacity after being Declined a Loan

If you have recently been declined for a personal loan, there are a few things you can do to increase your chances of being successful on your next application.  Lenders look at a number of factors when assessing your loan application and these can affect what we call “borrowing power”. 

Things that affect your ability to borrow money can include your affordability, your existing level of debt and if it’s being paid and your credit report.  Additional things like weekly expenses, available security and overall honesty also impact how a lender will view your application.

You can improve your chances of being approved by thoroughly looking at the information you submitted to the loan company and working out way to improve. 

Step 1: Review your Finances and budget

Your affordability is a massive factor in your application, reviewing your weekly expenses against your weekly income is the first step to making sure you can afford a loan.  After assessing your essential expenses and other loan repayments, looking for things that you can cut back on or remove from your budget to allow for an additional loan repayment will help to make you more affordable.

Paying off existing loans before applying for another one or looking at a consolidation loan that will combine all your outstanding debt into one repayment might be an option. When you have multiple active loans, it can be difficult for a lender to give you additional finance because it reduces your affordability. 

Step 2: Review your Credit History

Your credit history will also play a massive role in determining your borrowing capacity.  It is how you prove that you are a reliable customer and a “good risk” for a loan company. 

Ensuring you always pay your bills and loan repayments helps to improve your credit rating and shows other companies that you will meet their requirements.  Similarly, not making your payments will negatively impact your credit score and will work against you.

If you are not sure of your credit score, many companies like Equifax and Illion, will offer you a free copy of your credit report every 12 months, so you can keep track of it.

It is also important to remember that every time you apply for a loan, it is another check on your credit file.

Step 3: Consider any other Factors that impact your loan SERVICEABILITY

There are plenty of additional things that lenders look at when assessing a loan application. As mentioned above, things like your weekly spending and what collateral you might be able to offer go hand-in-hand with the bigger things like your credit score, your other active loans, and your affordability. 

They will also look at how much you want and what you want the money for.  Lenders are heavily legislated by the Government, and we take our checks very seriously – If you are looking to improve your borrowability, it is important to carefully asses all the things a lender might look at and see if there are areas you can improve. 

If you'd like to enquire about what types of loans you can get from us, or wish to ask about how our loan application process works, please contact Champion Loans.